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Ballmers Three Amigos - Page 4

Back at the Redmond Ranch In some ways, the Great Plains buyout represents the lesser of two evils for Microsoft. Sources say Microsoft wanted to enter the enterprise app market, where companies like Siebel enjoy triple-digit sales growth. But jumping into the high-end arena would have alienated Microsofts closest Windows 2000 allies, including PeopleSoft and SAP.

The Great Plains deal, by contrast, is an SMB play that gets Microsoft into the applications market without upsetting the companys enterprise partners. Ballmer drove that message home during a recent meeting with Craig Conway, CEO of PeopleSoft. Conway says he left the meeting quite comfortable that Microsoft wont attack PeopleSofts enterprise business.

Some of Microsofts smaller allies arent quite so lucky. Sources say Navision, Sage and several other Great Plains rivals are less than pleased by the Microsoft buyout. "Once a sector of the software industry shows really big potential, Microsoft buys its way into that market and destroys the niche players," says a marketing VP from one accounting software maker. "This time, were going to be the victims."

Further reading

At least one company, IBM, is extending an olive branch to Microsofts estranged partners. Steve Mills, senior VP for IBMs software strategy, likens the Microsoft-Great Plains deal to Oracles move beyond databases into enterprise applications. The move alienated some of Oracles application partners. Some of those allies went on to more tightly embrace IBMs DB2 database. "The same thing could happen with the Microsoft-Great Plains deal," says Mills. "Great Plains competes in a highly fragmented market. Well greet their rivals with open arms."

Of course, Microsoft and Great Plains hope to corral the SMB landscape long before IBM can send out the cavalry.